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US PPI rose by 0.2% in July – August report

August 18, 2011

The producer price index was published yesterday. It showed that the rate of PPI for finished goods inclined by 0.2% (seasonally adjusted) during July compared with June’s figures. This increase is after the PPI fell by 0.4% during June. This report also serves as an indicator to the upcoming core CPI to be published later on today in the U.S.

The food index is one of the prime factors that have contributed to the rise in the PPI during July.

The energy index felly by 0.6% during July after it had fell by 2.8% during June. During last month, the PP index declined mainly due to the drop in energy prices by 2.8%.

This index is estimated to have a lagged negative linear correlation with gold price; i.e. as the PPI rises, gold prices falls the following day. If this relation will also hold up this month, this news of the PPI falling might curb some of the increases in gold price and perhaps even cause a short term change in direction.